How can the IMF help in crisis?Getting a member country's economy back on track

Why
Are Exports Down?

The
Finance Minister begins. "I must remind you that our exports are
down because of the highinflation over the last
several years. Our currency, the CFA franc, is tied to the French franc.
Fifty CFA francs equal 1 French franc. But both prices and wages have
gone up faster here than in Europe. So the same amount of European
currency buys lessand less here."

"You
know that fish is our biggest export. Well, the tuna fish packers are
losingmoney," says the Finance Minister. "With
production costs so high, they can’t sell a can of tuna in Europe
for enough to make a profit." You learn that there are two reasons
that the tuna costs so much to produce.

"The
first reason is that wages for the workers keep going up," says
the Labor Minister. "The trade unions refuse to discuss any sort
of pay cuts to help lower the cost of export production. They say they’ll
go on strike if wages aren’t kept high."

"The
second reason is that electricity is very expensive," says
the Energy Minister. "The managers of the fish packing plant are
complaining that the tax on electricity adds too much to their costs.
They say they’ll have to shut down the plant if we don’t lower
the electricity tax."

What will
you do to bring down production costs of your fish exports and make
them more competitive on the international market?